Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

need help with the last question For nearly 20 years, Crane Coatings has provided painting and galvanizing services for manufacturers in its region. Manufacturers of

need help with the last question

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed
For nearly 20 years, Crane Coatings has provided painting and galvanizing services for manufacturers in its region. Manufacturers of various metal prod ucls have relied on the quality and quick turnaround time provided by Crane Coatings and its 20 skilled employees. During the past year, as a result of a sharp upturn in the economy, the companyfs sales have increased by 30% relative to the previous year. The company has not been able to increase its capacity fast enough. so Crane Coatings has had to turn work away because it cannot keep up with customer requests. Top management is considering the purchase of a sophisticated robotic painting booth. The booth would represent a considerable move in the direction of automation versus manual labour. If Crane Coatings purchases the booth, it would most likely lay off 15 of its skilled painters. To analyze the decision, the company compiled production information from the most recent year and then prepared a parallel compilation assuming that the company would purchase the new equipment and lay off the workers. As you can see, the company projects that during the past year it would have been far more protable if it had used the automated approach. Sales $2,520,000 $2,520,000 Variable costs 1,134,000 630,000 Contribution margin 1,336,000 1,090,000 Fixed costs 25 1,900 75 15,000 Operating income $1,134,100 $1,134,000 {a} V Your answer is correct. Calculate the contribution margin ratI'a under each approach. [b] If Your answer is correct Calculate the brea k-Even point in 5ales dollars under each approach. Wampum $_ $ (C) Q Your answer is correct Using the current level of sales, calculate the ma rain of safety,f ratio under each approach and interpret your ndings. [and mt2dedmlplmeg2J59J The current approach is E risky.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles of Economics

Authors: Robert Frank, Ben Bernanke

5th edition

73511404, 978-0073511405

Students also viewed these Accounting questions